A stranded asset, in the International Energy Agency's own definition, is an investment that is made but which, at some time prior to the end of its economic life as assumed at the investment decision point, is no longer able to generate an economic return, because the market or regulatory environment around it has changed. In energy, the term is used most often for fossil fuel reserves, wells, mines and power plants that a faster-than-expected shift to low-carbon energy could leave unburned, unmined or shut early, and the stakes are large: a 2021 study found that limiting warming to 1.5 degrees Celsius with a 50 percent chance required leaving nearly 60 percent of proven oil and gas reserves and 90 percent of proven coal reserves in the ground.
Facts
Concept Domain Formulated YearMarks Carbon Tracker Initiative's own report, titled Unburnable Carbon: Wasted Capital and Stranded Assets (19 April 2013), which put this specific phrase into wide use in energy and climate finance. This is Carbon Tracker's own framing, an advocacy-oriented climate-finance research nonprofit, named here plainly rather than paraphrased as neutral fact. The broader economic idea of an asset losing value before the end of its working life is older, rooted in 1990s US utility-deregulation stranded cost literature; 2013 marks this concept's specific climate-finance sense, not the first use of stranding language in energy economics generally. Connections
Associated With
Coal, Energy Sources Coal-fired generation and coal reserves are named directly by Carbon Tracker's own stranded-assets glossary entry as a real-world example of an energy asset class at risk of stranding under decarbonization policy.
Source Carbon Tracker: Unburnable Carbon - Wasted Capital and Stranded Assets
Sources
1. Wikipedia
Wikimedia FoundationStranded asset, IEA definition and 2021 studyQuote, Stranded asset, IEA definition and 2021 study
[Stranded assets are] those investments which are made but which, at some time prior to the end of their economic life (as assumed at the investment decision point), are no longer able to generate an economic return, as a result of changes in the market and regulatory environment.
2. Carbon Tracker: Unburnable Carbon - Wasted Capital and Stranded Assets
Carbon Tracker Initiative, 2013Report title and publication date
This is the original Unburnable Carbon report which pioneered the concept of the Carbon Bubble.
Associated With: Coal, Carbon Tracker, Terms List, Stranded Assets
There are already examples of coal mines, coal and gas power plants, and other hydrocarbon reserves which have become stranded by the low carbon transition.
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